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English: The Fall of the Berlin Wall, 1989. The photo shows a part of a public photo documentation wall at Former Check Point Charlie, Berlin. The photo documentation is permanently placed in the public. Türkçe: Berlin Duvarı, 1989 sonbaharı (Photo credit: Wikipedia)

If history had turned out differently, the USSR would’ve taken home the most Olympic medals this year, as the total awarded to athletes from the area was 163, according to a blog on Foreign Policy’s website. As we all know, the Berlin Wall came down, the Soviet Union collapsed, and now Russia has to be content with its third-place position of 82 medals. Athletes from the United States were awarded the most medals (104), followed by participants from China, who took home 88.

In another contest, the U.S. stock market outperformed many developed and emerging equity markets for the year as of the end of August. Despite the negativity surrounding corporate earnings, lower economic growth and ongoing political uncertainty, the S&P 500 ETF rallied, climbing 13% through August 30. By comparison, the iShares S&P Europe 350 ETF only rose 6.9%.

What seems to be overlooked by investors is the fact that stocks in emerging Europe have also seen noteworthy results. As you can see in the chart below, the Eastern European Fund (EUROX) rose nearly 10 percent over the same time frame. Turkey was a significant contributor to those results, with stocks in the country climbing almost 40 percent; Russian stocks only advanced about 4 percent.

With the underperformance of the iShares S&P Europe 350 ETF, many investors have interpreted this as a contrarian sign to hunt for bargains in developed Europe. However, if you believe that Europe will see better days ahead, greater opportunity may lie to the east.

Here are three reasons to look at Emerging Europe stocks today:

1. Better GDP Growth Potential

The companies in the Eastern European area are located in countries set to grow faster than the U.S. and countries in Europe. Russia and Turkey are projected to have a GDP of about 4 percent this year, while Poland’s GDP growth is expected to be 2 to 3 percent.

2. Stocks[/entity] are Undervalued[/entity][/entity]

Along with benefiting from higher GDP growth, many of these stocks are historically undervalued. BCA Research looked at certain value metrics of several emerging market countries, including the trailing and forward price-to-earnings ratio and price-to-book ratios and compared these figures to the historical average going back to the early 1990s. Poland has a reading of about 1.2, which means that today’s price-to-earnings and price-to-book ratios are 1.2 standard deviations below the historical mean. Conversely, Mexico’s reading of -1.5 indicates that stocks in this country are historically overvalued.

Among emerging countries, Poland, Russia and Turkey are the better values, says BCA.

BCA also looked at the emerging markets where growth was expected to improve over the next five years compared to the previous two years. Among “the most favorably-placed markets” for valuation and economic growth were Russia and Poland.